Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Economist’

(Not only American) banks pay depositors less than online accounts

Posted by hkarner - 19. Februar 2018

Date: 18-02-2018
Source: The Economist

They seem to be relying on the power of inertia to retain their customers—a risky strategy

EVERYONE knows that interest rates are rising—except, perhaps, one group: American savers who have put $12trn in bank accounts. They have seen the government’s deposit guarantee, purportedly designed to protect them, become a ticket for banks to receive free money. For evidence, look no further than the ubiquitous bank branches dotting America’s high streets.

Those seeking a home for their money find that, unlike petrol stations or grocers, banks are not required to post their most important price, the interest rate. Ask and you will be referred to a specialised member of staff. After a wait, numbers are typed into a computer, followed by pauses for thought, a bit of throat clearing and, often, comments that the current rates on offer may not exceed inflation. Then come hints, doubtless filtered through a compliance department, of the higher returns available on the bank’s investment offerings, which, of course, carry risks (and fees). Den Rest des Beitrags lesen »

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How does Chinese tech stack up against American tech?

Posted by hkarner - 17. Februar 2018

Date: 15-02-2018
Source: The Economist: Schumpeter

Silicon Valley may not hold onto its global superiority for much longer

AMERICANS, and friends of America, often reassure themselves about its relative decline in the following way. Even if the roads, airports and schools continue to slide, it will retain its lead in the most sophisticated fields for decades. They include defence, elite universities, and, in the business world, technology. Uncle Sam may have ceded the top spot to China in exports in 2007, and manufacturing in 2011, and be on track to lose its lead in absolute GDP by about 2030. But Silicon Valley, the argument goes, is still where the best ideas, smartest money and hungriest entrepreneurs combine with a bang nowhere else can match.

Or is it? American attitudes towards Chinese tech have passed through several stages of denial in the past 20 years. First it was an irrelevance, then Chinese firms were sometimes seen as copycats or as industrial spies, and more recently China has been viewed as a tech Galapagos, where unique species grow that would never make it beyond its shores. Now a fourth stage has begun, marked by fear that China is reaching parity. American tech’s age of “imperial arrogance” is ending, says one Silicon Valley figure. Den Rest des Beitrags lesen »

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The roots of hyperinflation

Posted by hkarner - 13. Februar 2018

Date: 12-02-2018
Source: The Economist

Fifty-seven cases of runaway inflation have been documented. They have common patterns

IN a country where the annual inflation rate is in four figures, the previous month can seem like a golden age. Venezuela’s currency, the bolívar, has lost 99.9% of its value in a short time. It is hard to fathom how a government can get its economic policy so wrong when the effects of hyperinflation are so severe. What are its causes?

Start with a definition. In 1956 Phillip Cagan, an economist working at America’s National Bureau of Economic Research, published a seminal study of hyperinflation, which he defined as a period in which prices rise by more than 50% a month. The phenomenon is rare. Steve Hanke, of Johns Hopkins University, and his colleagues have documented 57 cases, of which Venezuela is the most recent. Often the backdrop is revolution, war or political transition. The first recorded episode occurred between 1795 and 1796, in revolutionary France. There was a cluster of hyperinflations in Europe after the first world war, notably in Germany, and in the early 1990s in countries affected by the break-up  the Soviet Union. Yet war and revolution are not always the setting, as the recent cases of Venezuela and Zimbabwe show. Den Rest des Beitrags lesen »

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Insider trading has been rife on Wall Street, academics conclude

Posted by hkarner - 11. Februar 2018

Date: 08-02-2018
Source: The Economist

One study suggests insiders profited even from the global financial crisis; another that the whole share-trading system is rigged

INSIDER-TRADING prosecutions have netted plenty of small fry. But many grumble that the big fish swim off unharmed. That nagging fear has some new academic backing, from three studies. One argues that well-connected insiders profited even from the financial crisis.* The others go further still, suggesting the entire share-trading system is rigged.**

What is known about insider trading tends to come from prosecutions. But these require fortuitous tip-offs and extensive, expensive investigations, involving the examination of complex evidence from phone calls, e-mails or informants wired with recorders. The resulting haze of numbers may befuddle a jury unless they are leavened with a few spicy details—exotic code words, say, or (even better) suitcases filled with cash. Den Rest des Beitrags lesen »

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Elon Musk’s Boring Company

Posted by hkarner - 10. Februar 2018

Date: 08-02-2018
Source: The Economist

Making tunnels the way you make spaceships
The principles of Mr Musk’s approach

ELON MUSK can seem flakily up himself. His newish tunnelling business appears to be a case in point. The project has a cute name (the Boring Company), a wacky way of raising money (an “Initial Hat Offering” raised almost $1m by selling baseball caps), a physicist-knows-best approach to a social problem (putting private cars on high-speed underground trolleys to reduce urban congestion) and a quirky, memorable goal (to produce a tunnelling machine that goes faster than a snail, in this case a snail called Gary). But it also showcases the techniques that have made Mr Musk a success.

Chris Anderson, the curator of TED, a non-profit organisation that spreads ideas, says that Mr Musk is “uniquely good at system-design thinking”. He reduces thorny problems to what he sees as their essence—typically expressed in terms of physics—and then extends his analysis to technologies, business systems, human psychology and design in an attempt to solve the issue. Den Rest des Beitrags lesen »

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The forces of 5G

Posted by hkarner - 10. Februar 2018

Date: 08-02-2018
Source: The Economist
The next generation of wireless technology is ready for take-off
Whizzy 5G tech has everything going for it barring a strong business case

NORTH KOREAN athletes will not be the only unusual participants at the winter Olympics in Pyeongchang in South Korea, which begin on February 9th. Anyone can take part, at least virtually. Many contestants will be watched by 360-degree video cameras, able to stream footage via a wireless network. At certain venues around the country sports fans will be able to don virtual-reality, head-mounted displays to get right into the action. Flying alongside a ski jumper, for instance, will offer an adrenalin rush without any risk of a hard landing.

These virtual experiences will be offered by KT, South Korea’s largest telecoms firm. They are meant to showcase the latest generation of wireless technology, known as “5G”. But just as ski jumpers never know exactly how far they will leap after leaving the ramp, it is unclear where 5G will land. Den Rest des Beitrags lesen »

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What will result from America’s strangely timed fiscal stimulus?

Posted by hkarner - 9. Februar 2018

Date: 08-02-2018
Source: The Economist
Subject: The great experiment

The threat of inflation is less worrying than some investors think

GOOD economic news is not always good for everyone. On February 2nd it was revealed that average hourly wages grew by 2.9% in the year to January—the fastest growth since 2009, at the end of the recession. Stocks promptly tumbled around the world. Investors fretted that inflation might rise, forcing the Federal Reserve to raise interest rates further and faster than expected. Whether the jitters are justified, however, depends on how an extraordinary experiment in economic policy plays out. America is poised to stimulate an economy that is already growing strongly, at a time of historically low unemployment.

Most of the stimulus will come from tax cuts that President Donald Trump signed into law in December. These are worth 0.7% of projected GDP in 2018 and 1.5% of GDP in 2019. On February 18th Senate leaders sketched out a budget deal containing a further fiscal boost. If the proposal passes, defence spending will rise by $80bn this year, pleasing Republicans. Democrats have been offered $63bn in spending on other programmes. The total increase in outlays is worth another 0.7% of GDP. The White House also promises to unveil an infrastructure investment plan on February 12th. Higher spending will add to government borrowing that, after tax cuts, is already likely to reach almost $1trn, or 5% of GDP, by 2019 (see chart 1). Den Rest des Beitrags lesen »

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The markets deliver a shock to complacent investors

Posted by hkarner - 9. Februar 2018

Date: 08-02-2018
Source: The Economist

Out of a clear blue economic sky, volatility returns and may linger

EVERY good horror-film director knows the secret of the “jump scare”. Just when the hero or heroine feels safe, the monster appears from nowhere to startle them. The latest stockmarket shock could have been directed by Alfred Hitchcock. The sharp falls that took place on February 2nd and 5th followed a long period where the only direction for share prices appeared to be upwards.

In fact the American market had risen so far, so fast that the decline only took share prices back to where they were at the start of the year (see chart). And although a 1,175-point fall in the Dow Jones Industrial Average on February 5th was the biggest ever in absolute terms, it was still smallish beer in proportionate terms, at just 4.6%. The 508-point fall in the Dow in October 1987 knocked nearly 23% off the market.

Still, surprise rippled round the world. Between January 29th and early trading on February 7th, the MSCI Emerging Markets Index dropped by 7.5%. The FTSE 100 index fell by 8.2% from its record high, set in January. A late recovery on February 6th, in which the Dow rebounded by 2.3% (or 567 points), restored some calm.

What explains the sudden turmoil? Perhaps investors had been used to good news for so long that they had become complacent. In a recent survey investors reported their highest exposure to equities in two years and their lowest holdings of cash in five. Another sign of potential complacency was the unwillingness of investors to pay for insurance against a market decline, something that showed up in the volatility, or Vix, index. Funds that bet on the continuation of low volatility lost heavily.

The wobble may also reflect a decision by investors to rethink the economic and financial outlook. Ever since 2009 central banks have been highly supportive of financial markets through low interest rates and quantitative easing (bond purchases with newly created money). There was much talk of an era of “secular stagnation”, in which growth, inflation and interest rates would stay permanently low.

But the Federal Reserve and the Bank of England are now pushing up interest rates, and the European Central Bank is cutting its bond purchases. Future central-bank policy seems much less certain. A pickup in global economic growth may naturally lead to fears of higher inflation. The World Bank warned last month that financial markets could be vulnerable on this front.

Bond yields have been moving higher since the autumn; the yield on the ten-year Treasury bond, 2.05% on September 8th, reached 2.84% on February 2nd. On that day American employment numbers were released, showing that the annual rate of wage growth had climbed to 2.9%. That suggested inflation may be about to move higher. Furthermore, the recent tax-cutting package means that the federal deficit may be over $1trn in the year ending September 2019, according to the Committee for a Responsible Federal Budget, a bipartisan group. Making such a large amount of bonds attractive to buyers might require higher yields. Den Rest des Beitrags lesen »

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Breaking the euro area’s doom loop

Posted by hkarner - 3. Februar 2018

Date: 01-02-2018
Source: The Economist

A safe asset is devised for the euro zone

An ingenious proposal to end banks’ dangerous reliance on domestic sovereign bonds

THESE are bright days in the euro area. Preliminary figures say that the currency zone’s GDP grew by 2.5% last year, the fastest since 2007. But many of the faultlines in the zone’s financial system, as revealed by the financial crisis, remain. A proposal published on January 29th by a group reporting to the European Systemic Risk Board, a prudential supervisor, may mend one of the more troubling flaws.

Euro-area banks favour their home countries’ debt. A sample of 76 lenders examined by supervisors last year had exposures of €1.7trn ($1.9trn) to euro-area governments, of which €1.1trn was lent to their home states. That exceeded the banks’ common equity tier-1 capital, their cushion against losses, of €1trn. The fortunes of states and banks are thus bound in a “doom loop”. Suppose an economic shock raises the risk of a sovereign default. Banks’ balance-sheets start to crumble. They need propping up by the already wobbly state. And as they cut lending, the real economy weakens, worsening the fiscal woe. That, more or less, is what happened in the zone’s sovereign-debt crisis. Den Rest des Beitrags lesen »

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Solar energy: A new type of solar cell is coming to market

Posted by hkarner - 3. Februar 2018

Date: 01-02-2018
Source: The Economist

Perovskites have the potential to outshine silicon in solar panels

SOMETIMES it takes a while for the importance of a scientific discovery to become clear. When the first perovskite, a compound of calcium, titanium and oxygen, was discovered in the Ural mountains in 1839, and named after Count Lev Perovski, a Russian mineralogist, not much happened. The name, however, has come to be used as a plural to describe a range of other compounds that share the crystal structure of the original. In 2006 interest perked up when Tsutomu Miyasaka of Toin University in Japan discovered that some perovskites are semiconductors and showed particular promise as the basis of a new type of solar cell.

In 2012 Henry Snaith of the University of Oxford, in Britain, and his colleagues found a way to make perovskite solar cells with an efficiency (measured in terms of how well a cell converts light into electric current) of just over 10%. This was such a good conversion rate that Dr Snaith immediately switched the direction of Oxford Photovoltaics, a firm he had co-founded to develop new solar materials, into making perovskites—and perovskites alone. Progress has continued, and now that firm, and also Saule Technologies, a Polish concern founded in 2014 to do similar things, are close to bringing the first commercial perovskite solar cells to market. Den Rest des Beitrags lesen »

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